The Economics of Creator Royalties: Big Data and Sentiment Analysis in Non-fungible Tokens Market
PI: Prof Chen LIN
Abstract:
One unique feature of non-fungible tokens (NFTs) is that they allow creators to embed royalties via smart contract execution. NFTs can use royalties to incentive talent creators and signal higher underlying value of NFTs. However, critics argue that rational buyers may price in the cost of royalties and reduce the trading activities. Since the royalty setting is controversial among NFT communities, this project provides novel evidence for the economics of creator royalties in NFT market.First, this project aggerates comprehensive on-chain NFT transaction and royalty payment data to examine the impact of creator royalties on the market price of individual NFT items. Second, the project calculates NFT collection characteristics to examine the collection-level impact of creator royalties via price discrimination and trading facilizing. By retrieving social media textual data of NFT ownership posts, this project uses machine learning architectures for ownership sentiment scoring of NFT buyers. The project then tests the relationship between creator royalties and ownership sentiment of NFT buyers.This project contributes to the knowledge base of NFT literature, facilitate decision-making of NFT investors, and enhance understanding and utilization of NFTs as an alternative asset in the investment landscape.